SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
March 15, 2000
(February 29, 2000)
HON INDUSTRIES Inc.
(Exact name of registrant as specified in its charter)
IOWA 0-2648 42-0617510
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
414 East Third Street, P.O. Box 1109, 52761-7109
Muscatine, Iowa (Zip Code)
(Address of principal executive offices)
(319) 264-7400
Registrant's telephone number, including area code
ITEM 5. Other Events.
Item 2. Acquisition or Disposition of Assets.
On February 29, 2000, HON INDUSTRIES Inc. ("HON"), through its
subsidiary Hearth Technologies Inc. ("Hearth"), purchased two
hearth products distribution businesses under two, separate
agreements. Under one agreement Hearth purchased the assets and
assumed certain liabilities of American Fireplace Company and
Hearth & Home, Inc. (the "AFC Sellers") for $38,750,000 in cash, a
6.5% Promissory Note in the principal amount of $2,250,000 and
5.5% convertible debentures in the principal amount of
$26,500,000. In the other transaction Hearth purchased all of the
issued and outstanding shares of Allied Fireside, Inc. from Ron F.
Skoronski and Kirk R. Sorenson, (the "Allied Shareholders") and
purchased the assets and assumed certain liabilities of Madison
Fire Place, Inc., Fireplace & Spa, Inc. and the Monaqua Fireplace
Company (the "Allied Sellers" and, together with the AFC Sellers
and the Allied Shareholders, the "Sellers") for $36,250,000 in
cash, a 6.5% Promissory Note in the principal amount of $2,250,000
and 5.5% convertible debentures in the principal amount of
$26,500,000. The purchase prices were determined through arms-
length negotiations.
The assets purchased relate to the distribution operations of the
Sellers, primarily in Georgia, Maryland, Minnesota, Michigan, New
Jersey, Northern Carolina, Ohio, Pennsylvania, South Carolina,
Tennessee, Virginia and Wisconsin. These operations include the
sale, installation and servicing of gas and wood-burning
fireplaces and related accessories, spas, outdoor kitchens,
barbecues and grills, outdoor and patio furniture, shelving and
garage doors. Hearth intends to continue to use the assets
purchased to conduct the businesses as conducted by the Sellers.
These businesses will be operated as divisions of Hearth Services
Inc., a wholly owned subsidiary of Hearth. In connection with the
purchase, the Allied Shareholders and four of the principal
executive officers of the AFC Sellers, Richard A. Grove, Philip T.
Mercer, James Setree and David E. Scott, each entered into three-
year employment and non-competition agreements with Hearth.
The cash portion of the purchase prices was obtained from
available cash and borrowing under the $200,000,000 Credit
Agreement dated June 11, 1997 among HON, Bankers Trust Company, as
syndication agent and administrative agent, and various lending
institutions. As additional consideration, Hearth issued its
6.5%, three-year, promissory notes in the aggregate principal
amount of $4,500,000 and its 5.5%, five-year, convertible
debentures in the aggregate principal amount of $53,000,000. The
promissory note and debentures are guaranteed by HON. The
debentures may be converted after the third anniversary of the
closing of the transaction into shares of common stock of Hearth
representing approximately 9.75% of the issued and outstanding
shares of Hearth, on a fully diluted basis. The shares into
which the debentures may be converted are subject to certain
rights of the holders to sell those shares to Hearth after the
third anniversary, and before the fifth anniversary, of the
closing of the transaction. In addition, the shares are subject
to certain rights of Hearth to purchase the shares in the event
certain of the holders terminate their employment with Hearth, and
after the fourth anniversary of the transaction. These rights to
sell and purchase the shares into which the debentures may be
converted are set forth in the Securityholders' Agreement dated
February 29, 2000 by and among HON, Hearth, the Sellers and others
(the "Securityholders' Agreement").
ITEM 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Business Acquired: The acquired
businesses, on a combined basis, do not meet the 20%
significant subsidiary tests required for financial
statement reporting; therefore, no financial statement
information is required to be filed with this Current
Report on Form 8-K.
(b) Pro Forma Financial Information: The acquired businesses,
on a combined basis, do not meet the 20% significant
subsidiary tests required for financial statement
reporting; therefore, no pro forma financial information
is required to be filed with this Current Report on Form
8-K.
(c) Exhibits.
Exhibit
Number Exhibit
2.1(i) Purchase Agreement dated as of January 28, 2000 (the
"AFC Purchase Agreement") by and among American Fireplace
Company and Hearth & Home, Inc., as Sellers, Hearth
Technologies Inc., as Buyer, and HON INDUSTRIES Inc.
2.1(ii) Purchase Agreement dated as of January 28, 2000 (the
"Allied Purchase Agreement") by and among Ron F.
Skoronski, Kirk R. Sorensen, Madison Fire Place, Inc.,
Fireplace & Spa, Inc. and The Minocqua Fireplace Company,
as Sellers, Hearth Technologies Inc., as Buyer, and HON
INDUSTRIES Inc.
2.1(iii) Form of Convertible Debenture.
2.1(iv) Securityholders' Agreement.
99.1 Text of press release dated March 1, 2000.
Certain related transaction documents and the schedules to the AFC
Purchase Agreement (the "AFC Schedules") and the Allied Purchase Agreement
(the "Allied Schedules") are not being filed herewith. HON undertakes
to furnish a copy of any omitted Schedule to the Commission upon request.
Pursuant to Item 601(b)(2) of Regulation S-K, the following is a list of
the omitted Schedules.
Schedules
AFC Schedules
Form of Buyer Note
Form of Sellers' Counsel Opinion
Form of HON General Counsel Opinion
Form of Instrument of Assumption of Assumed Liabilities
Form of HON Guaranty
Form of Employment and Non-Competition Agreement
Form of Shareholder Guaranty
Disclosure Schedule
Accounts Receivable
Affiliate Companies
Agreed Allocation of Purchase Price
Assignment and Consents
Bank Accounts
Builder Contracts
Changes in Circumstances
Contracts
Customers and Suppliers
Employee Benefits
Employees
Environmental Matters
Existing Indebtedness to be Discharged by Closing
Financial Statements
Fixed Assets
Insider Interests
Insurance
Intellectual Property
Liabilities
Liens
Litigation
Non-Assigned Contracts
Permits
Real Estate and Leases
Warranty Costs
Schedule 1.2 - Designated Assets
Schedule 2.1(b) - Assigned Accrued Liabilities
Schedule 4.6(g) - Acquisition Settlement Agreements
Schedule 5.1(a) - Organization and Standing; Power and
Authority
Schedule 5.1(s)(2) - Company Plans
Schedule 5.1(v) - Taxes
Schedule 5.1(ii) - Year 2000
Schedule 5.3(d) - Buyer and HON Consents
Schedule 5.4(b)(i) - Buyer Authorized Capital Stock
Schedule 5.4(b)(ii) - Shimek Debentures
Schedule 7.1 - Employee Matters
Schedule 9.7(g) - Vacation Accruals
Allied Schedules
Form of Buyer Note
Form of Sellers' Counsel Opinion
Form of HON General Counsel Opinion
Form of Instrument of Assumption of Assumed Liabilities
Form of HON Guaranty
Form of Employment and Non-Competition Agreement
Form of Shareholder Guaranty
Form of Transition Services Agreement
Disclosure Schedule
Accounts Receivable
Affiliate Companies
Agreed Allocation of Purchase Price
Assignment and Consents
Bank Accounts
Builder Contracts
Changes in Circumstances
Contracts
Customers and Suppliers
Employee Benefits
Employees
Environmental Matters
Existing Indebtedness to be Discharged by Closing
Financial Statements
Fixed Assets
Insider Interests
Insurance
Intellectual Property
Liabilities
Liens
Litigation
Non-Assigned Contracts
Permits
Real Estate and Leases
Warranty Costs
Schedule 1.2 - Designated Assets
Schedule 1.3 - Allied Shares
Schedule 2.1(b) - Assigned Accrued Liabilities
Schedule 4.5 - Certain Leased Properties
Schedule 4.6(g) - Acquisition Settlement Agreements
Schedule 5.1(a) - Organization and Standing; Power and
Authority
Schedule 5.1(s)(2) - Company Plans
Schedule 5.1(s)(ll) - Company Plans
Schedule 5.1(v) - Taxes
Schedule 5.1(ii) - Year 2000
Schedule 5.3(d) - Buyer and HON Consents
Schedule 5.4(b)(i) - Buyer Authorized Capital Stock
Schedule 5.4(b)(ii) - Shimek Debentures
Schedule 7.1 - Employee Matters
Schedule 9.7(g) - Vacation Accruals
Schedule 11.2(I)(a)(ii) - Allied Indemnification
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Current Report on Form
8-K to be signed on its behalf by the undersigned hereunto duly
authorized.
HON INDUSTRIES Inc.
Date: March 15, 2000. By /s/ James I. Johnson
James I. Johnson
Vice President, General
Counsel and Secretary
INDEX TO EXHIBITS
Sequential
Exhibit Exhibit Page
Number Number
2.1(i) Purchase Agreement dated as of January 28, 8
2000 (the "AFC Purchase Agreement") by and
among American Fireplace Company and Hearth
& Home, Inc., as Sellers, Hearth
Technologies Inc., as Buyer, and HON
INDUSTRIES Inc.
2.1(ii) Purchase Agreement dated as of January 28, 80
2000 (the "Allied Purchase Agreement") by
and among Ron F. Skoronski, Kirk R.
Sorensen, Madison Fire Place, Inc.,
Fireplace & Spa, Inc. and The Minocqua
Fireplace Company, as Sellers, Hearth
Technologies Inc., as Buyer, and HON
INDUSTRIES Inc.
2.1(iii) Form of Convertible Debenture. 161
2.1(iv) Securityholders' Agreement. 167
99.1 Press release, dated March 1, 2000. 191